Up to 93.7 per cent of Thai labourers have admitted that they are heavily in debt, amid signs of rising unemployment if the country's political stand-off prolonged into the second half of the year, according to the survey by the University of the Thai Cha
Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said the UTCC survey conducted from April 17-21 with 1,200 samples revealed that more than 90 per cent of labourers, especially those who made less than Bt15,000 per month, were heavily in debt.
The survey shows that the debt of 60 per cent of labourers who made less than Bt15,000 per month actually exceeded their income while 50 per cent of them had to take loans in order to sustain their day-to-day expenses and to pay for their shelter.
Currently, according to the UTCC, Thai workers’ debt-per-household is equal to Bt106,000 and most of them – 56 per cent – got their loans from outside the system while 43.9 per cent got their loans from within the system. Most of them need an average of about Bt7,400 every month for loan repayment.
Thanavath said the ratio of outside-the-system debt to debt-per-household is the highest in six years when compared to previous UTCC surveys, which reflected that workers with lower wages are more in debt than their real income.
"Being in debt is now the number one concern for Thai labour, while last year it was ranked at number five," he said. "Other concerns this year include future income, rising cost of living, losing their job, and political problem. As of now, 90 per cent of the labour force does not have an extra job and 80 per cent of them are having problems repaying their debt, a development that is worrisome," he added.
On the other findings, Thanavath said 51 per cent of the Thai labour force saw the economy getting worse and 39 per cent of them are beginning to worry about losing their jobs while believing that it has become harder to find a new job.
Minimum wage inadequate
About 24 per cent of them said the current minimum daily wage was not adequate and believe the minimum wage should be increased to Bt388.25 per day and proposed that the government increase it to Bt498.06 per day in three years and Bt579.74 in five years.
Thanavath revealed that according to a business survey, there will be no hiring at this time, but there will be no downsizing either. However, if the political uncertainty prolongs and the economy remains sluggish, businesses might consider downsizing their work force in September and October this year.
Some businesses have already reduced their working hours and cut down on extra incomes, said Thanavath, adding he is worried that if operators cut their labour force, it would lead to a higher unemployment rate to 1.5-1.7 per cent – around 600,000 people – of the entire labour force, the highest in 10 years.
The unemployment rate last year was at 0.7 per cent – about 400,000 people of the entire labour force – and if the political stand-off prolonged into the second half of this year, more people will be out of jobs, said Thanavath.
Thanavath said he is against the decision to raise the value-added tax (VAT) to 10 per cent because it would exacerbate the economic crisis, which might fall into recession from rising expenditure and lower investment, tourism and domestic consumption. He said he does not see an increase in VAT helping the government make up for the slowdown in revenue collection because the caretaker government cannot spend their previous budget effectively and there is no need to find extra income.
"The government should reconsider any moves to raise taxes in the coming one to two years aimed at stabilising the fragile economy. Inflation has risen due to rising oil price, electricity costs have increased due to the weather, and the prices of goods have also increased. Therefore, there should not be any action that would add to the financial burden of businesses and the people," said Thanavath.